Federal land could be used for housing to bring down costs, minister Sean Fraser says

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Ottawa is mulling changes to its federal land policies and looking for ways to intensify the use of public land for housing, as it attempts to accelerate its strategy to create cheaper shelter options.

The government’s premier housing initiative, the $82-billion National Housing Strategy, does very little with federal public lands. But new thinking about how Crown land can be used for housing has been taking hold.

Housing Minister Sean Fraser said Monday there was an opportunity to create housing on existing federal land and singled out some of the country’s large public real estate holders, such as Canada Post and the Department of National Defence.

“If you can build 20 storeys on top of a two-storey armoury, you should look at doing that,” Mr. Fraser said, adding that 60 storeys could also be built on top of a Canada Post building while the post office maintained its business on the ground floor.

It’s a potential shift in strategy for Ottawa to consider building homes on existing federal properties. For decades, the government has waited for federal departments to deem land as surplus, and then sold it for profit.

Prime Minister Justin Trudeau and his government have been under intense pressure to create more affordable housing as more residents struggle with shelter costs. The typical home price across the country is above $700,000. And the average monthly rent for a one-bedroom is near $2,000, according to Rentals.ca. Housing costs are even higher in the country’s largest job market of Toronto, where the typical home price tops $1-million and the monthly rent for a one-bedroom is just over $2,500.

As part of the effort to boost affordability, the ministry in charge of federal lands, Public Services and Procurement Canada, announced in November that developers will have to make commitments to build affordable units when they buy surplus federal land for housing. (The ministry did not provide a definition of affordability in the announcement.)

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Currently, the largest part of the National Housing Strategy is a program to provide low-cost loans for developers to build new housing. Less than 1 per cent of the housing strategy’s budget gives surplus federal lands and buildings to developers at a discount or no cost so that the developer can create affordable housing.

“There are enormous opportunities to remove the cost of land, which is one of the biggest costs and biggest increases in the cost of building in recent years,” Mr. Fraser said at the Monday event in Toronto.

“If we can help mitigate that cost increase and extract important commitments from people who will want to build to actually offer a certain level of affordability, it’s a no-brainer,” he said.

Non-profit housing developers have said access to land is one of the most critical components of delivering affordable housing because land is scarce and expensive to purchase.

“The three ingredients you need for any project are money, land and capacity,” said Ray Sullivan, executive director of the Canadian Housing and Renewal Association. “If you don’t have land, you can’t move forward.”

In comments after the Toronto event, Mr. Fraser said the federal government is looking at a “number of reforms on how to better leverage federal lands.”

“Those are the conversations we’re having now to identify how we can make land available and also reduce the fiscal impacts to government,” he said.

Asked whether the federal government should lease its land to developers instead of selling it outright, he said it is under consideration.

“If there’s a piece of land that we want to retain ownership of, we should be exploring new opportunities to make the land available for housing without permanently disposing of it through potentially leasing it to non-profit partners or builders who agreed to certain conditions on affordability,” he said.